China, the world's second-biggest energy user, started construction of its first carbon dioxide capture and storage project in Ordos in Inner Mongolia to reduce emissions.

The project will cost 210 million yuan ($30.9 million) and will be able to hold 100,000 metric tons of carbon dioxide a year, China National Petroleum Corp, the country's biggest oil producer and the plant's designer, said in a statement on its website today. The facility will start operations by the end of the year, it said.

China, the world's largest greenhouse gas emitter, pledged to reduce carbon dioxide it emits for each unit of economic output by 40 to 45 percent by 2020 from 2005 levels. Carbon dioxide capture and storage, or CCS, is a process whereby CO2 is captured from gases produced by fossil fuel combustion, compressed, transported and injected into deep geologic formations for permanent storage, according to the International Energy Agency.

The plant's annual capacity will be expanded to 1 million tons and 3 million tons in two phases in the future, according to the statement, which didn't give a time frame.

The plant is built on the site of a coal-to-liquid project constructed by Shenhua Group Corp, the nation's largest coal producer, it said.